The stock market in 2013 had its best year since 1997, ending the year with a high of 32.39%, as measured by the Standard and Poor's 500 Total Return (TR) Index.

Some have attributed this performance to increased economic growth. Revised Gross Domestic Product (GDP) fi gures for the Fourth Quarter reached 4.1%. This refl ected broad- based growth with consumers, businesses and exports contributing. Others believe the market was spurred on by the unprecedented $85 billion per month, four-year monetary stimulus from The Federal Reserve (Fed) known as Quantitative Easing. Now, the Fed has announced it would begin tapering off the stimulus – whether they will be able to do so without causing disruption in the fi nancial markets remains to be seen.

Despite the fi nancial news and ups and downs of the economic environment, we are confi dent that the companies we invest in have the potential to perform well over full market cycles, helping the investment of our shareholders appreciate while preserving their capital during downturns.

Our investment process relies not on the state of the overall economy but on the strength and growth prospects of each individual company in our Funds. Our holdings are selected and constantly monitored for strong fi nancials and sustainable competitive advantages, criteria that are at the foundation of our investment approach. We believe these attributes help them withstand most short-term issues in the broader economy.

While we were pleased to participate in the overall market upswing, we at Mairs & Power look forward to more normal markets in 2014 where our research and analysis is designed to continue to make a difference in our shareholders' ability to meet their long-term objectives.

Future Outlook

Our outlook for 2014 is straightforward: We believe the current economic expansion—although tepid—will continue at a modest rate for the foreseeable future. In our opinion, while economic growth is not likely to slow or stop, we don't see any near term indicators that will spark an increased rate of growth.

On the face of it, this may appear to be negative, but a tortoise-like slow and steady growth environment can be much easier for corporate management teams to maneuver within than a boom and bust economy, and thus bodes well for our Funds. Our focus is always on companies that have the potential to maintain their quality and grow consistently year after year. The market has had ﬁ ve consecutive years of positive returns without a 10% correction since October of 2011; it is likely the stock market is due for a downturn. This may occur when the tapering of Quantitative Easing begins or it may occur because of the "animal spirits" in the marketplace. Either way, we will, as always, exercise diligence in buying stocks at prices below our estimated valuation points. As well, when stocks have a run up in share price, we will continue to cautiously take proﬁ ts where it makes sense for our shareholders, always with an eye to the tax consequences.

Our expectation is that interest rates will rise in 2014, driven by continued economic growth and the tapering of the Federal Reserve's monetary stimulus. As a result, ﬁ xed income instruments may continue the downward movement they saw in 2013 as they respond to interest rates and ﬁ nally head back to their historic norms. Rising rates, as well as the high market valuations reached in 2013, may keep stock prices from rising too much until corporate earnings have time to catch up.

Balanced Fund Performance

The Mairs & Power Balanced Fund returned 19.02% in 2013, outperforming the 17.40% return of its benchmark composite index (60% S&P 500 Stock Index and 40% Barclays Capital Government/Credit Bond Index). For the quarter, the Fund at 6.17% performed in-line with the benchmark at 6.21%.

As is our guideline, we have maintained our long-term asset allocation of approximately 60% in equities and 40% in ﬁ xed income.

The biggest contributors to the portfolio for the quarter were companies in the healthcare, ﬁ nancial and industrial sectors. Speciﬁ cally, the Lincoln National Corporation and Principal Financial Group, which sell annuities and other ﬁ nancial instruments, both beneﬁ ted from the rising interest rates they were able to offer. We expect modest rising interest rates in 2014 to also help lift other ﬁ nancial stocks. As long-term interest rates rise, ﬁ nancial stocks will be better able to do what they have historically done – borrow at lower, short-term rates and lend and invest at higher, long-term rates and proﬁ t by the difference.

Our emphasis in the Fund on dividend-paying stocks paid off providing positive cash ﬂ ow that we were able to put to work. We added to our current holdings such as Baxter International Inc. and IBM as well as purchased a new position in C.H. Robinson. These stocks represent shares of strong companies at good valuations and are intended to be long-term investments for the Fund. The Fund's ﬁ xed income allocation was held back by a headwind in that asset class, putting about a 2.5% drag on the portfolio. For the year, approximately 10% of the 255 bonds in the portfolio had a positive price increase during the year. To lessen the interest rate risk, we are purchasing shorter-term bonds as cash becomes available to the Fund. We are not market timers; however, we will adjust our duration with new purchases. Rather, we are maintaining our proven strategy of purchasing quality securities at good prices and holding them for the long term.

Ronald L. Kaliebe

Lead Manager

William B. Frels

Co-Manager

The Fund's investment objective, risks, charges and expenses must be considered carefully before investing. The summary prospectus or full prospectus contains this and other important information about the Fund, and they may be obtained by calling Shareholder Services at (800) 304-7404 or visiting www.mairsandpower.com. Read the summary prospectus or full prospectus carefully before investing.

All holdings in the portfolio are subject to change without notice and may or may not represent current or future portfolio composition. The mention of speciﬁ c securities is not intended as a recommendation or an offer of a particular security, nor is it intended to be a solicitation for the purchase or sale of any security.

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